- The Washington Times - Friday, August 21, 2009

The social networking hub MySpace said Wednesday it is acquiring iLike, a popular music application on rival Facebook, in the first move by new management to expand after a series of drastic cuts and write-downs.

The $20 million agreement to purchase iLike confirmed rumors that had circulated this week.

ILike, which has 55 million users, will remain headquartered in Seattle, and its management team will stay intact, with brothers Ali and Hadi Partovi in the top two slots. They founded the service in 2006 with $16.5 million in venture capital, mostly from Ticketmaster Entertainment Inc.

Owen Van Natta, who replaced co-founder Chris DeWolfe as MySpace chief executive in April, told reporters on a conference call that iLike technology will help MySpace users share songs, videos and games away from their MySpace home pages.

For instance, iLike already has 10 million users on Facebook. It attaches itself to Apple Inc.’s iTunes music store with song recommendations, notifies fans of upcoming concerts and Twitter posts by their favorite artists, and allows people to see what their friends are listening to. It began selling songs in the MP3 format on Aug. 14 and is the No. 1 referrer of customers to Ticketmaster.com.

“We believe what iLike has created isn’t limited to just music and should extend to all the areas important to MySpace users, such as entertainment, video and games,” he said.

Facebook, which ranked iLike among its top eight applications and as the third most popular in its entertainment segment, said it did not expect the acquisition to affect its users.

Mr. Van Natta said the iLike technology would complement its MySpace Music joint venture, a free music streaming and discovery platform it launched with major recording companies in September. The two services, however, will not be integrated right away.

He noted that MySpace Music was “doing extremely well,” with the number of monthly visitors having nearly tripled since its launch to 12.1 million in June, according to Nielsen figures.

Charlene Li, founder of the consulting firm Altimeter Group, said iLike’s recommendation service should make it easier for MySpace users to find others who share similar tastes in books, movies, clothes and songs.

“It’s hard for people to find each other without painstakingly exploring their profiles one by one,” she said. “It would really make MySpace in many ways more useful.”

MySpace is recovering from a series of painful cuts after recently laying off 700 workers and breaking the lease on office space it no longer needed in west Los Angeles.

Its parent company, News Corp., booked about $630 million in impairment and restructuring charges due to Fox Interactive Media, which houses MySpace, in the three months ended June 30. News Corp. bought MySpace for $580 million in 2005.

Fox Interactive Media revenue, the majority of which comes from MySpace, also fell 15 percent year-over-year in the last quarter to $192 million, dragged down by a 22 percent decline in ad revenue.

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